TOWARD A NEW ASIAN ORDER : A WORLD REPORT SPECIAL SECTION : Regional Outlook : Freer Than Ever, Asia Goes Its Own Way : * Toward more - but not perfect - democracy : * Toward human rights, but collectively : * Toward free markets, but not fully free

Seldom has the Asia-Pacific region appeared as pacific as now.

In a single year, the Soviet threat has disappeared. Hopes for peace in Indochina have emerged. Ever-hostile North and South Korea are talking reconciliation. And America is preparing to make up with Vietnam.

Spots of tension remain. But in a sweep down the coast of the Asian continent and around Southeast Asia, nowhere can a powder keg be found before arriving at India and Pakistan and their potential for nuclear war.

The outlook is positive, the mood invigorating, the dynamism unchecked.

Replacing an Asia of wars and insurgencies, oxcarts and rickshaws is an Asia of cosmopolitan cities and streets clogged with cars that, a generation ago, average citizens never dreamed of owning within their lifetime. Pollution is gradually replacing poverty as a major concern. Satellites bring television to villages that never knew radio. Populations once regarded as mouths to feed are becoming consumers with cash to spend.

Asia is free as never before in this century to define its own political, economic and strategic place in the world--not as a pawn in a Cold War but as a full-fledged player.

The outlook is not uniformly bright, of course. Asia’s political future remains clouded by divisions among Asians themselves.

“Asia is only a geographical word. Asian nations share nothing in common,” said Naohiro Amaya, a former official of Japan’s Ministry of International Trade and Industry who heads the Dentsu Institute for Human Studies. Asians have different religions, histories and customs, he noted.

Also, poverty still entraps millions--130 million in China alone. North Korea, Myanmar (formerly Burma) and Cambodia remain basket cases. The Philippines, once Asia’s No. 2 economic power, is mired in the economic minor leagues, the growth of its poverty-stricken masses negating much of its gains.

But elsewhere, including China, “there is a tremendous sense of liberation. . , a sense that you can get ahead--that things are moving,” said Kenneth S. Courtis, chief strategist for Deutsche Bank Capital Markets (Asia) Ltd. in Tokyo.

Business firms investing across borders are integrating Asian economies, and “governments come along behind,” said Prof. Lawrence Krause of the University of California at San Diego.

“Let’s-make-a-deal economic development” is the new ideology, he said, the unifying link in a search for a “new Asian order.”

While no one yet knows for sure where that search will lead, it seems clear that it won’t be to some straightforward adoption of Western values that Americans so often regard as “universal.” In Asian eyes, the continent’s attempts at real Western-style liberal democracy--India and the Philippines--have produced violence-prone, economic stragglers, while variants of authoritarian capitalism such as Taiwan, Singapore and South Korea have been the wonders of the region.

America is viewed with no little respect here--even with awe. But Asians tend to put their own twists on American values.

Does Asia believe in the market economy? Sure, much of it does--but government-led, according to a strategic plan. And Asia’s market economies will still be dominated by families and conglomerates.

Is Asia getting more democratic? Yes--but even in Japan, Asian-style democracy still bears the imprint of top-down paternalism.

Do Asians believe in human rights? Absolutely--but with much greater emphasis on the collective welfare and less on individual liberties than in the American concept. American-style human rights are idealized as a goal, but considered premature for the fast-developing region.

New Vistas

To the region’s dreamers, new vistas are opening up.

Russia, once a threat, could become an opportunity. Moscow’s rapprochement with the south, for example, has been pivotal in reducing tensions on the Korean Peninsula after two decades of Cold War standoff between Seoul and still Communist Pyongyang in the north.

In a move once inconceivable, Moscow is now at least talking about returning to Japanese sovereignty four northern islands that Soviet troops seized at the end of World War II. Such a move could open the gates to massive Japanese aid. And investment from both South Korea and Japan could turn Siberia and the Sea of Japan region into a new source of Asian growth.

“The Russians are no longer seen as a threat--perhaps as an opportunity,” said U.S. Ambassador Donald P. Gregg in Seoul.

A prosperous “greater China” is taking shape as coastal provinces on the mainland blend with the economies of Hong Kong and Taiwan. Economically, Hong Kong is taking over neighboring Guangdong--even as China prepares politically to take over Hong Kong in 1997.

Taiwan’s businessmen and bankers are carrying out what Taiwan’s generals and admirals could never achieve--an invasion of the mainland with investment that has established beachheads in Fujian and Guangdong.

Ultimately, “greater China” could emerge as a major force to counter the Japanese economic juggernaut. At present, the pan-Asia Chinese network lacks technology. But it is accumulating financial clout.

Meanwhile, Kim Woo Choong, chairman of the Daewoo Group of South Korea, dreams of a “greater Korea.” After a visit to the Communist north in January, he said:

“If our country is reunited, we could emerge as one of the greatest economic zones of the world. Think of this: Unified, we will have a population of more than 70 million people. There are more than 1 million ethnic Koreans in China, about 300,000 ethnic Koreans in Russia. . . . (With) many Chinese and Russian inhabitants (joining in), we could easily build an economy around 200 million people and become a center of the Asian economy.”

Officially, at least, even North Korea has ended four decades of hostility by agreeing with Seoul last December to keep the Korean Peninsula free of nuclear weapons and to seek economic exchanges, reconciliation and ultimate unification. Some remain suspicious. With questions about North Korean nuclear ambitions still unresolved, the breakthrough could become meaningless, South Korea Prime Minister Chung Won Shik warned this month. But on paper, at least, there is clearly progress.

Last January, members of the Assn. of Southeast Asian Nations agreed to work toward establishing a free trading zone. Meanwhile, investors from ASEAN, itself the world’s fastest-growing economic area, are moving “to transform battlefields into markets,” as former Thai Prime Minister Chatichai Choonhavan put it in reference to a newly outward-looking Vietnam.

Already East Asia produces 62% of the world’s automobiles, 82% of its telecommunications equipment and 88% of its computer equipment, Deutsche Bank’s Courtis said. And by the year 2010, an “Asian economic sphere” stretching from eastern Russia to Myanmar and including Australia and New Zealand is expected to produce as much in goods and services as all of North and South America put together, the Japan Economic Research Center predicted in February.

The collective gross domestic product of this Asian behemoth will be $11.8 trillion in 1990 dollars, according to the Japanese forecast, compared with $11.2 trillion for the Americas and $11.4 trillion for Western Europe.

In terms of 2010 prices, Japan alone would have a GDP of $16 trillion, or 84% of the United States’ $19 trillion, the center added.

Asia for Asians

The newly confident voices of Asians caught up in this extraordinary economic growth are everywhere.

In Canton, China, Chen Zhanhong, 35, a former factory worker who set himself up as a “street tailor” sewing garments that people brought to him on a piece-by-piece basis in 1985, started his own factory operation two years later. In 1990, his company showed a profit of $200,000 on sales of $2 million, and he looks forward to increasing sales to $100 million in the next 10 years.

“I’ve expanded by more than 100 times in the past six years, so why shouldn’t I be able to expand by 50 times in the next 10?” Chen said.

In Hiratsuka, Japan, Koji Suzuki, 19, is the first member of his immediate family to go to college. His 17-year-old brother, Nobuyuki, expects to join him next year. The boys’ grandparents never got as far as high school; their parents managed only 12 years of schooling. Koji Suzuki earned money through a part-time job to buy his own car--something his father never dreamed of at his son’s age.

In Hong Kong, pedestrians talking on portable telephones--which have become the British colony’s new status symbol--fill the sidewalks. And in Bangkok, the value of the home Suvat Suebstantikul bought ten years ago has gone up as much as if his house was in Los Angeles.

Even before the rioting devastated the ethnic Korean community in Los Angeles, “many Koreans living in the United States have been looking back at their relatives in Seoul and saying to themselves, ‘They live better than me,’ ” says a Korean banker. Last year, 12,754 South Koreans--the lowest number since 1972--emigrated to the United States, while 5,539 ethnic Koreans migrated back home. As recently as 1980, the returnees pulling up stakes in the United States numbered only 848.

The emerging affluence has created a new interest in old roots. An Asian pop culture is emerging. Japanese-originated karaoke (literally, “empty orchestra,” or music without lyrics) has created a new style of night life throughout the region, forcing even visiting American business people, out on the town with Asian customers, to either get up and sing in public or risk hitting a sour note in daytime deals.

A new and politically aware middle class has emerged. In South Korea, it made itself felt in 1987 by openly siding with student demonstrators demanding democracy and forcing an end to authoritarian government. The process appears to be repeating itself in Taiwan and budding in Thailand.

Dark Scenarios

While the end of the Cold War presents enormous opportunities, pessimists can still find plenty of scenarios to satisfy them: the former Soviet republics disintegrating with massive armed forces and no one in control of their nuclear weapons; a China plunging into political disarray, or even breakup, precipitating a mass exodus of refugees; a North Korea armed with nuclear weapons or, worse, a reunified Korea with nuclear arms.

Then, too, growing American distrust--even dislike--is poisoning relations with a Japan that is seeking a “global partnership” with Washington. In the long term, the emotional rift could dissolve the Washington-Tokyo alliance and replace it with bitter rivalry. Other Asian countries would bear the fallout.

Other uncertainties include U.S.-China relations, the fate of the newly mounted U.N.-peacekeeping mission in Cambodia, Myanmar’s military repression and the future in three key countries long dominated by strong leaders: North Korea after Kim Il Sung, Indonesia after Suharto and China after Deng Xiaoping.

Also coming into clearer focus are Asia’s intense ethnic rivalries and distrust, and its diverse patchwork of religions and customs.

Now, more than ever, Asians want the United States, considered the only honest broker in sight, to stay on. Despite the Philippines’ expulsion of American troops, “no country in Southeast Asia is overjoyed with the reduction in U.S. presence,” Singapore’s defense minister, Brig. Gen. Yeo Ning Hong, told a recent conference.

“It would not surprise me to see the Vietnamese offer to allow us to return to Cam Ranh Bay,” said Ambassador Gregg in Seoul.

Although the United States, China and Russia have reduced troop levels, “no nation has declared a peace dividend. No country has reduced its defense expenditure,” Yeo complained.

Indeed, “most of the ASEAN countries are modernizing their air and naval capabilities,” noted Yukio Sato, director of the North American Bureau of Japan’s Foreign Ministry. Regional Russian forces still exceed defense requirements. And new concerns have arisen about a Chinese blue-water navy and “the rapid expansion of India’s navy,” he said.

Not least is “anxiety about the future direction of Japan’s defense policy,” Sato added.

Suddenly, Asia’s biggest concerns, the Japanese diplomat said, are how much U.S. forces will shrink and how much Japanese forces will grow. Japan, too, wants the United States to stay in Asia, partly to alleviate such fears, he added.

Indeed, the new security role for the United States is likely to be not that of a policeman suppressing “criminals” but rather a referee arbitrating feuds between America’s friends.

Without the United States around, China and Japan, for example, would embark on a struggle for hegemony, Amaya said. Such a struggle would plunge Asia into “an extremely unstable condition,” and the United States should not allow it, he added. “Someone has to direct the Asian orchestra.”

Then, too, there are South Korea and Japan, which have been “at each other’s throats for hundreds of years”--not to mention China and Russia, two other old tormentors of Korea, said Lee Chung Min of South Korea’s Sejong Institute.

“Our naval chief of staff said last year that South Korea must strengthen its navy to protect our sea lanes against Japan and China and the possibility of a resurgent Russian threat,” he said.

Only last month, South Korean President Roh Tae Woo declared that even a unified Korea would want an American troop presence as protection against its three neighbors.

Guided Capitalism

While Asians like the assurance of America’s military presence, they are not as enthusiastic about what they see as the occasional arrogance of Americans about their business practices. In Asia, they are fond of pointing out, who you know is still more important than what you sell.

Former Japanese Prime Minister Toshiki Kaifu admitted in 1990 that “in Japan, everything starts from personal relationships--in business or in any other field. We think one must know the other person to feel empathy toward that person.”

For Kaoru Togo, 33, a Tokyo stockbroker, it was “totally wrong” that Japanese brokerages reimbursed their best customers for stock market losses. But, he added, “the essence of being Japanese--not just for corporations but individuals as well--is mutual dependence and collusion.”

Japan’s system of keiretsu (horizontally-linked groups of corporations) and cross-holdings of shares help determine who buys from whom, whereas “in the United States, firms conduct transactions in a far more dry fashion, treating business as business,” Togo said. “They place orders with other companies that have good products, even if the other companies are not part of a keiretsu. “

While in Japan companies become a family, for the Chinese “the family is the company,” Courtis said.

Overseas Chinese have formed a vast web of what they call “human-link networks” forged through family or cultural relationships in the Philippines, Malaysia, Thailand and Indonesia--all nations with influential Chinese populations and family-controlled Chinese corporations.

South Korea’s chaebol (conglomerates) are also family affairs.

Only tiny Hong Kong and Singapore rank as free traders and free economies in the sense that Americans understand the terms. Asian countries have only grudgingly dismantled official import barriers, such as tariffs, in line with their own growth--a process in South Korea that Ambassador Gregg called “trench warfare.” But the regional trend remains one of government-guided economies.

In Japan, U.S. Ambassador Michael H. Armacost said that the United States will seek to extend bilateral negotiations on so-called structural impediments to free trade--including interlocking directorships and other practices--with Asian nations as they become major industrial countries.

But Asians increasingly are resisting so-called “harmonization” of business practices on American terms.

“The United States must learn that its rules are not always the best in the world,” Japan’s new ambassador to the United States, Takakazu Kuriyama, declared before leaving for his post.

Soviet-style state planning as a substitute for the market mechanism has proved a failure, wrote Kwon Man Hak, another fellow at the Sejong Institute. But “this does not mean that the market alone is the best device for development.” State intervention, including planning, plays a key role too, he said.

He Xin, a scholar at the Chinese Academy of Social Sciences, described Chinese preferences more bluntly.

“It would be absurd if China took the U.S.-type of free-market economy--the much-vaunted, omnipotent ‘invisible hand’--as the ultimate goal of its economic reform,” he said in an interview published in the Beijing Review. Rather, he cited Japan’s “effective democratic capitalist system” as the model for “long-term social stability and economic prosperity.”

Defining Democracy

Asia has reached a consensus that “dictatorial, command-style of government is impermissible,” said Isamu Miyazaki, head of the Daiwa Research Institute. But Asia has its own definition of democracy and human rights, he added.

Autocracy thrives in Indonesia, Singapore, Myanmar, Laos, Cambodia, Vietnam, China and North Korea. And where democracy exists, like economics, it is often government-guided. South Korea and Taiwan are emulating Japan in adopting a top-down style that restricts public participation in decision-making. Malaysia’s parliamentary democracy ensures rule by Malays over Chinese and Indian populations. Japan has been run by a single party and its predecessors since 1948.

And in the free-wheeling Philippines, “like Latin America . . . freedom winds up protecting the freedom of the conquistador” family dynasties, Amaya said.

“In the Orient, there is always an acute fear of disorder. It obstructs pluralism,” said Prof. Ahn Byung Joon of Yongsei University in Seoul.

Where elections are permitted, voters regard candidates as aspirants to power that will make them rich. As a result, they expect favors and gifts for their votes, degrading elections into little more than power struggles. And, except for Japan, the military dominates politics or stands ready to step in, if deemed necessary.

Human Rights

Condemnation of military repression in Myanmar--”about the worst government in Asia,” in the view of Ambassador Gregg--comes from the United States and Europe, not from Asian leaders. Only after Myanmar started expelling ethnic Muslims did Malaysia, Singapore and Indonesia criticize it. Japan last year said it would make democracy and human rights two of its standards for giving economic aid. But Tokyo has yet to apply those standards to any of its aid recipients, Myanmar included.

Many Asians have made clear they don’t want such standards.

“Is there only one form of democracy, or only one high priest to interpret it?. . . Hegemony by democratic powers is no less oppressive than hegemony by totalitarian states,” Malaysian Prime Minister Mahathir Mohammed declared last fall.

Indonesia responded to Dutch pressure for an improvement in human rights by ousting the Netherlands as chairman of an international group coordinating economic aid to Jakarta.

Rioting in Los Angeles offered China an opportunity to reiterate its view:

“You (American) apologists who proclaim the importance of human rights, waving your clubs, condemning and interfering in other countries’ internal affairs--why don’t you open your eyes and look at your own domestic situation?” the People’s Daily commented.

“It is impermissible for one country to try to force its ideas or models onto another country,” Jiang Zemin, general secretary of the Chinese Communist Party, declared in April.

Lee Kuan Yew, former prime minister of Singapore, predicts that Asian and Western values will converge, thanks to modern communications that instantly link the world. But he says the process will probably take 100 years.

Yet, many Asians say American values have won wide admiration, at least among ordinary people.

“It’s wrong to say that Asians deny human rights. . . . After they reach a certain level of life, do Chinese or Asians really desire democracy? My answer is yes,” Sato said. “Look at Japan. One of the causes of militarism was poverty in rural areas.”

U.S. in Retreat?

What worries many Asians--and some Americans--is the picture they see of an America in retreat in this region.

In daily life, Asia’s burgeoning growth will mean more Asian-made goods in American stores. It also means more jobs in U.S. export industries and at firms providing services that a poorer Asia never needed before. But the way things are going, it also means lost opportunities.

“It’s disquieting that our relative share in the growth of Asia has been declining,” Armacost said. “Our trade is growing in Asia. It far exceeds our trade in Europe. But we are a smaller relative factor in (Asian) trade and investment flows than we were 10 or 15 years ago.”

In 1990, Japan exported nearly $33 billion worth of goods to ASEAN, contrasted with $19 billion for the United States. In the same year, Japan’s new ASEAN investments outstripped those of the United States by a ratio of 4 to 1. Cumulatively, America’s investment reached $12.3 billion, Japan’s $29 billion.

Last year, the United States suffered a trade deficit with every Asian country except Vietnam, from which it bans imports. Japan enjoyed a surplus with every Asian country except Indonesia, from which it imports oil.

And while American aid in the region has dwindled to embarrassing trickles, support in Japan for foreign aid remains undiminished. One example: The United States is providing $59 million in aid to Indonesia this year; Japan is providing $1 billion.

“We have over-dramatized the potential for European integration and under-evaluated what is going on in East Asia,” said one Washington analyst.

And the likelihood that America will reap proportionate benefits from Asian growth in the future appears dim.

“Trade used to draw investment. Now investment is indispensable to trade,” Armacost said. A firm must produce in the market in which it sells “to design products to local tastes”--and that “requires sizable investments.” Yet “our national savings rate is not sufficient to support the level of investment either at home or abroad that we need to assure future competitiveness,” he added.

“Two-thirds of the future growth in the world auto industry will occur in Asia,” Courtis of Deutsche Bank said. But Detroit’s Big Three won’t be participating in it, he added.

American cars are as scarce in free-trading Singapore as they are in allegedly closed Japan. And the Big Three, Courtis predicts, will be so pressed fending off the Japanese at home that they won’t have the money to invest in the new factories that he said will be built in East and Southeast Asia to meet demand in this decade for about 3.5 million additional cars a year.

The Japanese will build two-thirds of Asia’s new automobile factories and gain a 50% to 60% share of the Asia market, Courtis predicted.

Enormous Clout

For all the questions about the trends, America retains enormous political influence in Asia--influence that often goes unnoticed.

Japan, for example, is waiting for progress in relations between the United States and Communist North Korea before moving forward in its own negotiations with Pyongyang to establish official ties.

South Korea, experts there say, won’t launch full-scale economic exchanges with North Korea until Washington--not Seoul--determines that the north has ceased its suspected development of nuclear weapons.

And while some Thais complained of American “bullying,” Thailand changed its choice of a new prime minister after the State Department accused the original nominee of involvement in narcotics trafficking.

Perhaps most remarkably, all of Asia agreed last year to U.S. demands that the United Nations hold elections for a Western-style--not Asian--democracy as part of the Cambodian peace settlement.

In the end, the extent to which the United States retains influence as Asia searches for its new order may depend on Washington’s capacity for self-restraint, according to some analysts here.

A Pentagon paper on “Defense Planning Guidance” published this spring described a United States that would restrain both Japan and Germany in order to remain the world’s sole superpower. Washington would seek U.N. support for American actions but would act unilaterally if the United Nations refused to go along.

But that kind of approach, Shuichi Kato, a prominent Japanese critic, wrote in an essay in the newspaper Asahi, would promote exactly what the United States fears--a militarily independent Germany and Japan. The United Nations must be molded into a truly international decision-making institution--and only the United States can do that, Kato said.

“No power outside the United States exists to check the power of the United States. American economic power remains the largest in the world. Its military power is overwhelming. Its academic standards are unrivaled. Whether such a country can restrain its own power is up to the American people themselves,” he said.

Whether American business can jump back into the future of Asia may also be up to the Americans themselves.